Canadian Tire Corporation Reports Strong First Quarter 2025 Results
TORONTO, May 8, 2025 /CNW/ - Canadian Tire Corporation, Limited (TSX: CTC) (TSX: CTC.A) (CTC or the Company) today announced results for its first quarter ended March 29, 2025.
- Consolidated comparable sales1 growth was 4.7%; Retail Revenue was up 4.0%.
- Q1 saw essential and discretionary purchasing up, with increased customer traffic.
- Q1 Normalized Diluted Earnings Per Share1 (EPS) was $2.18, up $0.80; Diluted EPS was $0.67, down $0.71 compared to the prior year.
"We had a strong quarter of sales and earnings growth, as we controlled the controllables, elevated customer loyalty, and delivered the great value and seasonal products customers were seeking. It's clear Canadians are choosing CTC," said Greg Hicks, President and CEO, Canadian Tire Corporation.
"Since March, we also announced our new transformative growth strategy – True North – and have hit the ground running with investments in new store concepts, dramatic expansion of Triangle Rewards including new RBC and WestJet loyalty partnerships, and a new company structure that maximizes our world-class customer insights and our ability to go to market in more efficient and modern ways."
FIRST-QUARTER HIGHLIGHTS
- Consolidated comparable sales were up 4.7% and consolidated retail sales1 were up 5.1%. Increased trips drove sales growth across all banners, with particular strength in Ontario, Quebec and Eastern Canada.
- Canadian Tire Retail (CTR) comparable sales1 grew 4.7%, with growth across all CTR divisions except Fixing, led by strong growth in seasonal weather-related categories. Auto maintenance, outdoor tools, and auto parts were the top-performing lines of business in the quarter.
- SportChek delivered a third consecutive quarter of comparable sales1 growth, up 6.3%, driven by strong sales across both corporate and franchise stores. Skiing and snowboards, hockey, and outerwear were the top performing categories in the quarter.
- Mark's comparable sales1 were up 2.2%, driven by industrial wear. New store openings continued to be the most significant contributor to retail sales growth and advances in in-store Net Promoter Score (NPS).
- Backed by the strength of the Canadian Tire brand and Triangle member engagement, loyalty sales growth outperformed retail sales. Loyalty penetration1 was up 132 bps, reaching 54.5% of retail sales on a direct scan, rolling 12-month basis.
- Consolidated income before income taxes (IBT) was down $51.3 million to $51.6 million and Diluted EPS was $0.67, including the results for Helly Hansen business (now included in discontinued operations) and expenses related to the implementation of the Company's True North strategy.
- Normalized for the True North expenses, IBT1 on a continuing operations basis was up $62.8 million to $165.7 million, which resulted in Normalized Diluted EPS (continuing operations) of $2.00, up $0.92 from last year. Improved IBT was mainly due to an increase in retail segment profitability.
- Normalized Retail IBT1 on a continuing operations basis was $50.9 million, up $69.2 million, due to higher gross margin and lower interest expense.
- Financial Services IBT was $97.0 million, up $1.3 million, as higher revenue offset expected increases in net impairment losses, as well as higher funding costs.
STRATEGIC HIGHLIGHTS
- During the first quarter, CTC launched True North, its new four-year transformative growth strategy, designed to drive core retail growth through four strategic cornerstones: disciplined capital investments to build exceptional digital and store experiences; an expanded Triangle Rewards loyalty system; creating more personalized and data-driven customer relationships; and a more agile, tech-driven and efficient operating company. The strategy is designed to increase shareholder value above the Company's historic levels. True North includes more than $2 billion in capital investment over the four years starting in 2025 across a series of value creating initiatives in each focus area, which will be overseen by a newly established transformation management office.
- The transformation is underway, with progress on a number of fronts.
- As part of True North's focus on expanding the Triangle Rewards system, the Company announced today a new partnership with WestJet Rewards, in addition to its March 27th announcement of the addition of RBC as a strategic Triangle partner. Both partnerships are expected to launch in 2026 and will be key building blocks for the strategy, creating more value for Triangle members, increasing member acquisition and engagement, and contributing to retail sales growth by expanding the reach and issuance of Canadian Tire Money beyond CTC's retail banners and Canadian Tire Bank.
- True North's store enhancement program will invest in modern new store formats, expected to improve sales, margin and customer experience. Planned investments in 2025 include more than 30 Canadian Tire store projects and 18 Mark's store projects, including seven new Bigger, Better, Bolder stores, capitalizing on Mark's record of accretive returns and emerging market share opportunities in the casual apparel sector. In addition, SportChek is optimizing its portfolio, and opened with the second of its two new concept "Destination Sport" stores, located in Toronto, Ontario, in April of 2025.
- Since announcing the True North strategy, the Company has begun restructuring into a more agile operating company under a new senior leadership team.
- CTC is making progress towards the completion of its previously announced divestiture of the Helly Hansen business. The transaction is expected to close before the end of the second quarter, unlocking capital for shareholders and strategic capital investments.
CONSOLIDATED OVERVIEW
As at March 29, 2025, the assets and liabilities of Helly Hansen have been classified as held for sale and the Helly Hansen results, net of intersegment results, have been presented separately as discontinued operations in the Company's current and comparative results. Unless otherwise indicated, all financial information represents the Company's results from continuing operations.
- Revenue was $3,456.7 million, up 3.7% compared to $3,332.8 million in the same period last year.
- Consolidated IBT was $51.6 million, down $51.3 million compared to the prior year. On a normalized basis, consolidated income before income taxes was up $62.8 million.
- Diluted EPS was $0.49, or $2.00 on a normalized basis, compared to $1.08 on a normalized basis in the prior year.
- Diluted EPS for discontinued operations was $0.18 in Q1 2025, compared to $0.30 in Q1 2024.
- Refer to the Company's Q1 2025 MD&A section 4.1.1 for information on normalizing items and additional details on events that have impacted the Company in the quarter.
RETAIL SEGMENT OVERVIEW
- Retail sales1 were $3,423.0 million, up 5.1%, compared to the first quarter of 2024. Retail sales (excluding Petroleum)1 were up 4.9% and consolidated comparable sales were up 4.7%.
- CTR retail sales1 were up 5.0% and comparable sales were up 4.7% over the same period last year.
- SportChek retail sales1 increased 6.5% over the same period last year, and comparable sales were up 6.3%.
- Mark's retail sales1 increased 2.6% over the same period last year, and comparable sales were up 2.2%.
- Retail revenue was $3,061.8 million, an increase of $117.3 million, or 4.0%, compared to the prior year; Retail revenue (excluding Petroleum)1 was up 3.5%.
- Retail gross margin was $977.8 million, up 4.2% compared to the first quarter of the prior year, and up 4.0% excluding Petroleum1; Retail gross margin rate (excluding Petroleum)1 increased 19 bps to 36.1%.
- Retail IBT was $(63.2) million in Q1 2025 or $50.9 million on a normalized basis, compared to $(18.3) million on a normalized basis in the prior year.
- Retail Return on Invested Capital1 (ROIC), calculated on a trailing twelve-month basis, was 10.4% at the end of the first quarter of 2025, compared to 8.9% at the end of the first quarter of 2024, due to the increase in earnings over the prior period.
- Refer to the Company's Q1 2025 MD&A sections 4.2.1 for information on normalizing items and additional details on events that have impacted the Retail segment in the quarter.
FINANCIAL SERVICES OVERVIEW
- Financial Services segment IBT was $97.0 million compared to $95.7 million in the prior year.
- As expected, net write-offs and funding costs were higher when compared to the same quarter last year but were offset by revenue, which was up 1.7%.
- Gross Average Accounts Receivable1 (GAAR) was up 1.6% relative to the prior year, driven by continued cardholder engagement that led to higher average account balance1 which were up 2.3%.
- Refer to the Company's Q1 2025 MD&A section 4.3.1 and 4.3.2 for additional details on events that have impacted the Financial Services segment in the quarter.
CT REIT OVERVIEW
- Diluted Adjusted Funds from Operations1 (AFFO) per unit was up 3.9% compared to Q1 2024; diluted net income per unit was $0.363, compared to $0.345 in Q1 2024.
- Increased its monthly distribution per unit by 2.5% to $0.07903, or $0.94836 per unit on an annualized basis, that will be effective with the July 15, 2025 payment to unitholders of record on June 30, 2025.
- For further information, refer to the Q1 2025 CT REIT earnings release issued on May 5, 2025.
CAPITAL ALLOCATION
CAPITAL EXPENDITURES
- Total capital expenditures were $115.9 million, compared to $121.4 million in Q1 2024.
- Operating capital expenditures1 were $110.4 million, compared to $119.1 million in Q1 2024.
- 2025 operating capital expenditures are expected to be towards the upper end of the Company's previously disclosed range of $525.0 million to $575.0 million.
QUARTERLY DIVIDEND
- On May 7, 2025, the Company's Board of Directors declared a dividend of $1.775 per share, payable on September 1, 2025, to shareholders of record as of July 31, 2025. The dividend is considered an "eligible dividend" for tax purposes.
SHARE REPURCHASES
- On November 7, 2024, the Company announced its intention to repurchase up to $200 million of its Class A Non-Voting Shares, in excess of the amount required for anti-dilutive purposes, in 2025.
- On March 6, 2025, as part of the announcement of the launch of its True North transformative growth strategy, the Company increased its share repurchase intention to up to $400 million, subject to the completion of the sale of Helly Hansen (the 2025 Share Purchase Intention). Any such repurchases will be made under the Company's 2025-26 Normal Course Issuer Bid.
- In the first quarter of 2025, $78.1 million of Class A Non-Voting Shares were repurchased under the 2025 Share Purchase Intention.
1) NON-GAAP FINANCIAL MEASURES AND RATIOS AND SUPPLEMENTARY FINANCIAL MEASURES
This press release contains non-GAAP financial measures and ratios, and supplementary financial measures. References below to the Q1 2025 MD&A mean the Company's Management's Discussion and Analysis for the First Quarter ended March 29, 2025, which is available on SEDAR+ at http://www.sedarplus.ca and is incorporated by reference herein. Non-GAAP measures and non-GAAP ratios have no standardized meanings under GAAP and may not be comparable to similar measures of other companies.
A) Non-GAAP Financial Measures and Ratios
Normalized Diluted Earnings per Share
Normalized diluted EPS, a non-GAAP ratio, is calculated by dividing Normalized Net Income Attributable to Shareholders, a non-GAAP financial measure, by total diluted shares of the Company. For information about these measures, see section 9.1 of the Company's Q1 2025 MD&A.
The following table is a reconciliation of normalized net income attributable to shareholders of the Company to the respective GAAP measures:
(C$ in millions, except per share amounts) | Q1 2025 | Q1 2024 |
Net income | $ 47.0 | $ 79.1 |
Net income attributable to shareholders | 27.3 | 59.9 |
Add normalizing items, net of tax: | ||
Restructuring costs | 70.3 | — |
Other transformation and advisory costs | 13.8 | — |
Normalized Net income | $ 131.1 | $ 79.1 |
Normalized Net income attributable to shareholders | $ 111.4 | $ 59.9 |
Normalized Diluted EPS | $ 2.00 | $ 1.08 |
Consolidated Normalized Income Before Income Taxes, and Retail Normalized Income Before Income Taxes
Consolidated Normalized Income Before Income Taxes, and Retail Normalized Income before Income Taxes are non-GAAP financial measures. For information about these measures, see section 9.1 of the Company's Q1 2025 MD&A.
The following table reconciles Consolidated Normalized Income Before Income Taxes to Income Before Income Taxes:
(C$ in millions) | Q1 2025 | Q1 2024 |
Income before income taxes | $ 51.6 | $ 102.9 |
Add normalizing items: | ||
Restructuring costs | 95.4 | — |
Other transformation and advisory costs | 18.7 | — |
Normalized Income before income taxes | $ 165.7 | $ 102.9 |
The following table reconciles Retail Normalized Income (Loss) Before Income Taxes to Income Before Income Taxes:
(C$ in millions) | Q1 2025 | Q1 2024 |
Income before income taxes | $ 51.6 | $ 102.9 |
Less: Other operating segments | 114.8 | 121.2 |
Retail Income (loss) before income taxes | $ (63.2) | $ (18.3) |
Add normalizing items: | ||
Restructuring costs | 95.4 | — |
Other transformation and advisory costs | 18.7 | — |
Retail Normalized Income (loss) before income taxes | $ 50.9 | $ (18.3) |
CT REIT Adjusted Funds from Operations and AFFO per unit
AFFO per unit, a non-GAAP ratio, is calculated by dividing AFFO by the weighted average number of units outstanding on a diluted basis. AFFO is a non-GAAP financial measure. The following table reconciles GAAP Income before income taxes to FFO and further reconciles FFO to AFFO:
(C$ in millions) | Q1 2025 | Q1 2024 |
Income before income taxes | $ 51.6 | $ 102.9 |
Less: Other operating segments | (53.9) | 1.8 |
CT REIT income before income taxes | $ 105.5 | $ 101.1 |
Add: | ||
CT REIT fair value (gain) loss adjustment | (24.8) | (23.6) |
CT REIT deferred taxes | (0.2) | 0.9 |
CT REIT lease principal payments on right-of-use assets | (0.1) | (0.2) |
CT REIT fair value of equity awards | 0.2 | (0.4) |
CT REIT internal leasing expense | 0.5 | 0.4 |
CT REIT funds from operations | $ 81.1 | $ 78.2 |
Less: | ||
CT REIT properties straight-line rent revenue | (1.9) | (1.2) |
CT REIT direct leasing costs | 0.2 | 0.3 |
CT REIT capital expenditure reserve | 6.7 | 6.5 |
CT REIT adjusted funds from operations | $ 76.1 | $ 72.6 |
Retail Return on Invested Capital (ROIC)
ROIC is calculated as Retail return divided by the Retail invested capital. Retail return is defined as trailing 12-month Retail after-tax earnings excluding interest expense, lease related depreciation expense, inter-segment earnings, and any normalizing items. Retail invested capital is defined as Retail segment total assets, less Retail segment trade payables and accrued liabilities and inter-segment balances based on an average of the trailing four quarters. Retail return and Retail invested capital are non-GAAP financial measures. For more information about these measures, see section 9.1 of the Company's Q1 2025 MD&A.
(C$ in millions, except where noted) | Q1 2025 | Q1 2024 |
Income before income taxes | $ 1,123.8 | $ 582.1 |
Less: Other operating segments | 467.4 | 141.0 |
Retail Income before income taxes | $ 656.4 | $ 441.1 |
Add normalizing items: | ||
Restructuring costs | 95.4 | — |
Other transformation and advisory costs | 18.7 | — |
Gain on sale of Brampton DC, net of inventory write-down | (222.9) | — |
Expenses related to the strategic review of CTFS | 8.7 | — |
Targeted headcount reduction-related charge | 19.6 | |
DC fire | — | (56.4) |
Retail Normalized Income before income taxes | $ 556.3 | $ 404.3 |
Less: | ||
Retail intercompany adjustments1 | 220.5 | 212.2 |
Add: | ||
Retail interest expense2 | 319.8 | 329.8 |
Retail depreciation of right-of-use assets | 569.8 | 593.1 |
Retail effective tax rate | 24.5 % | 26.3 % |
Add: Retail taxes | (299.6) | (293.2) |
Retail return | $ 925.8 | $ 821.8 |
Average total assets from continuing operations | $ 20,863.9 | $ 20,734.9 |
Less: Average assets in other operating segments | 4,353.9 | 4,437.8 |
Average Retail assets from continuing operations | $ 16,510.0 | $ 16,297.1 |
Less: | ||
Average Retail intercompany adjustments1 | 4,340.6 | 3,939.0 |
Average Retail trade payables and accrued liabilities3 | 2,654.9 | 2,604.8 |
Average Franchise Trust assets | 574.9 | 531.3 |
Average Retail invested capital | $ 8,939.6 | $ 9,222.0 |
Retail ROIC | 10.4 % | 8.9 % |
1 Intercompany adjustments include intercompany income received from CT REIT which is included in the Retail segment, and intercompany investments made by the Retail segment in CT REIT and CTFS. |
2 Excludes Franchise Trust. |
3 Trade payables and accrued liabilities include Trade and other payables, Short-term derivative liabilities, Short-term provisions and Income tax payables. |
Operating Capital Expenditures
Operating capital expenditures is a non-GAAP financial measure. For more information about this measure, see section 9.1 of the Company's Q1 2025 MD&A.
The following table reconciles total additions from the Investing activities reported in the Consolidated Statement of Cash Flows to Operating capital expenditures:
(C$ in millions) | Q1 2025 | Q1 2024 |
Total additions1 | $ 96.9 | $ 116.6 |
Add: Change in accrued additions and other non-cash items | 19.0 | 4.8 |
Less: CT REIT acquisitions and developments excluding vend-ins from CTC | 5.5 | 2.3 |
Operating capital expenditures | $ 110.4 | $ 119.1 |
1 This line appears on the Consolidated Statement of Cash Flows under Investing activities. |
B) Supplementary Financial Measures and Ratios
The measures below are supplementary financial measures. See Section 9.2 (Supplementary Financial Measures) of the Company's Q1 2025 MD&A for information on the composition of these measures.
- Consolidated retail sales
- Consolidated comparable sales
- Retail revenue (excluding Petroleum)
- Retail sales and retail sales (excluding Petroleum)
- Canadian Tire Retail comparable and retail sales
- SportChek comparable and retail sales
- Mark's comparable and retail sales
- Retail gross margin rate and retail gross margin (excluding Petroleum)
- Gross Average Accounts Receivable
- Average account balance
- Loyalty penetration
To view a PDF version of Canadian Tire Corporation's full quarterly earnings report please see: https://mma.prnewswire.com/media/2682186/CANADIAN_TIRE_CORPORATION__LIMITED___INVESTOR_RELATIONS_Canadian.pdf
FORWARD-LOOKING STATEMENTS
This press release contains information that may constitute forward-looking information within the meaning of applicable securities laws, which reflect management's current expectations regarding future events and the Company's True North strategy. All statements other than statements of historical facts contained in this press release may constitute forward-looking information, including but not limited to, information with respect to: the impacts of the Company's True North strategy; the agreement to sell Helly Hansen; the planned launch of loyalty partnerships with RBC and WestJet; the Company's 2025 operating capital expenditure expectations, including planned investments in CTR and Mark's stores; the Company's four year capital expenditure expectations in connection with the True North strategy; and the Company's intention to repurchase its Class A Non-Voting Shares. Readers are cautioned that such information may not be appropriate for other purposes. Often, but not always, forward-looking information can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "believe", "estimate", "plan", "can", "could", "should", "would", "outlook", "target", "forecast", "anticipate", "aspire", "foresee", "continue", "ongoing" or the negative of these terms or variations of them or similar terminology. Although the Company believes that the forward-looking information in this press release is based on information, estimates and assumptions that are reasonable, such information is necessarily subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking information. For information on the material risks, uncertainties, factors and assumptions that could cause the Company's actual results to differ materially from the forward-looking information, refer to section 14.0 (Forward-Looking Information and Other Investor Communication) of the Company's Q1 MD&A, available on the SEDAR+ website at http://www.sedarplus.ca and https://investors.canadiantire.ca. The Company does not undertake to update any forward-looking information, whether written or oral, except as is required by applicable laws.
CONFERENCE CALL
Canadian Tire will conduct a conference call to discuss information included in this news release and related matters at 8:00 a.m. ET on Thursday, May 8, 2025. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at https://investors.canadiantire.ca and will be available through replay at this website for 12 months.
ABOUT CANADIAN TIRE CORPORATION
Canadian Tire Corporation, Limited (TSX: CTC.A, TSX: CTC, "CTC") has been a proudly Canadian business since 1922. Guided by its brand purpose, "We are here to make life in Canada better," CTC has built an expansive national retail presence, exceptional customer brand trust and one of Canada's strongest workforces – employing, along with its local Dealers and franchisees, tens of thousands of Canadians. At its core are retail businesses, each designed to serve life's pursuits: Canadian Tire, offering products spanning Living, Playing, Fixing, Automotive, and Seasonal & Gardening, bolstered by notable banners Party City and PartSource; Mark's, a leading source for casual and industrial wear; SportChek, Hockey Experts, Sports Experts and Atmosphere, offering the best brands of active wear and gear; and Pro Hockey Life, a hockey specialty store catering to elite players. CTC's banners, brand partners and credit card offerings are unified through its Triangle Rewards loyalty program – a linchpin of CTC's customer-driven strategy. With nearly 12 million members, Triangle integrates first-party data to deliver valuable rewards and personalized experiences across nearly 1,700 retail and gasoline outlets. CTC also operates a retail petroleum business and a Financial Services business and holds a majority interest in CT REIT, a TSX-listed Canadian real estate investment trust. For more information, visit Corp.CanadianTire.ca.
FOR MORE INFORMATION
Media: Stephanie Nadalin, (647) 271-7343, stephanie.nadalin@cantire.com
Investors: Karen Keyes, (647) 518-4461, karen.keyes@cantire.com
SOURCE CANADIAN TIRE CORPORATION, LIMITED - INVESTOR RELATIONS
